Hardrive Inc.’s “screed man” Mike Lasker, left, measures the asphalt thickness during an asphalt pour, while Craig Becker evens the spread in the background Friday on U.S. 12 near Orono. The paving company is reeling from asphalt shortages and high prices it can t pass on to MnDOT.

The gas pump and meat aisle are handy gauges for inflation. But the black asphalt flowing out of Steve Hall’s trucks onto U.S. 12 near Long Lake is a pungent reminder consumers are hardly alone in inflation’s grip.

Soaring costs for fuel and other construction materials are walloping contractors nationally, and a brewing problem with some asphalt supplies is only the latest example.

Refinery asphalt prices nationally have risen more than 40 percent since March, government statistics show. Hall’s paving company, Hardrives Inc., of Rogers, was already reeling from this budgetary pothole when its main asphalt supplier announced it couldn’t supply the high-grade asphalt he contracted for. Coming in the middle of the 2008 road-paving season, it’s a problem for the Minnesota Department of Transportation, too.

“I’ve never seen it this tough,” said Hall, who also is chairman of the Associated General Contractors of Minnesota. “As an industry, it’s going to be very difficult to keep our head above water.”

Contractors say they haven’t seen costs rise so much since 1973. But there’s a key difference this time, said Kenneth Simonson, chief economist of the Associated General Contractors of America, the Arlington, Va.-based trade group that represents about 33,000 mostly nonresidential contractors. In the inflationary 1970s, prices of nearly all goods were soaring, making it easier for construction contractors to pass through costs.

The jumps run the range of construction materials such as steel, plastic pipes, gypsum wallboard and insulation. Hall quickly ticked down the list of price hikes jolting his company:

The cost of waste oil it uses to fire burners to dry the sand and rock it mixes into the asphalt has risen to $1.30 a gallon, from 90 cents last year.

The liquid asphalt cement it buys from oil refiners cost $300 a ton in January. It now ranges from $600 to $700 a ton. “One supplier isn’t quoting at all,” Hall said.

The diesel fuel to haul materials to job sites and to run the company’s pavers, rollers and compactors has risen to $4.10 a gallon, from about $2.70 in January.

The hikes are potentially crippling, Hall said, though he is unaware of any local contractors buckling — yet. Besides obviously crimping margins, Hall said, he suspects soaring construction costs will impede new projects.

Right now, it’s asphalt causinghis latest headache.Asphalt is the sludge left after oil refiners distill crude oil into various fuels. Contractors such as Hardrive buy it from oil refineries to mix with gravel and sand to create the mixture they spread on roadways.

Hall said he can’t pass on the big asphalt hikes to the Minnesota Department of Transportation, with which he conducts a good deal of business. State contracts allow for price escalation clauses on fuel and steel but not other materials, Hall said.

According to Simonson, refiners are trimming asphalt production in favor of more profitable products such as gasoline, diesel fuel, jet fuel and kerosene. Some refiners have invested heavily in cokers, he said, to further break up crude oil molecules and wring out still more fuel, leaving little or no asphalt.

“That shift, plus record-high crude prices, explains the huge surge in asphalt prices in the last few months,” Simonson said.

Flint Hills Resources, a key local asphalt supplier, threw another wrench into the mix. On July 9, it informed customers in six Upper Midwest states that it can’t supply contracted amounts of polymer asphalt and polymer-modified emulsions, a thinner asphalt mixture used to seal road surfaces, because of decreasing polymer supplies. Asphalt modified with polymers is more durable over a wider range of temperatures. It became MnDOT’s standard about five years ago.

In a letter to customers, Flint Hills said it is exercising the “force majeure” clause in its contracts — a clause that excuses parties from their obligations because of unusual events beyond their control — because of the supply problem.

In an interview, company spokesman Mike Zipko said Flint has commodity-grade asphalt, but the high-grade modified asphalt is in short supply, because Flint can’t get enough of a polymer called styrene butadiene styrene. SBS looks like pencil-eraser-size rubbery white pellets.

“There’s a worldwide shortage of this,” Zipko said. “It’s not just here.”

Zipko said that as oil refineries have shifted production to higher-demand products, they’ve stopped making enough SBS. Flint Hills won’t say where it gets its SBS.

Bob Berkley, president of the Association of Modified Asphalt Producers, said the SBS shortages are caused, in turn, by global shortages of butadiene, a bottom-of-the-barrel byproduct of refining heavy crude oil. He called the shortage “a very serious issue” affecting tire makers, too, since SBS is an ingredient in rubber. Berkley said his St. Louis-based association has a committee working on the problem, and it expects to issue a white paper about it later this week.

Flint Hills Resources is offering to substitute commodity-grade asphalt at a discount until the matter is resolved, Zipko said.

Hall, meanwhile, said he’s not sure what to do. He’s awaiting instructions from MnDOT.

Tom Ravn, acting state construction engineer for MnDOT, said the asphalt supply issue affects six to eight highway projects under way around the state and could force a monthlong delay on one of them. Ravn wouldn’t say which one. He said he’s fielding calls from concerned contractors and studying the state’s options, from granting delays to possibly lowering the asphalt grade it requires, among other things.

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